SOUTHERN CALIFORNIA GAS CO FILES (8-K) Disclosing Other Events
Item 8.01 Other Events
From
("SoCalGas"), a subsidiary of
gas leak from one of the injection-and-withdrawal wells, SS25, at its
Canyon
Enforcement Division ("SED") and California Public Advocates ("CalPA") of the
Order Instituting Investigation ("OII") opened by the CPUC in
regarding the Leak (the "Leak OII"). In addition, this report provides an update
on the status of litigation filed in connection with the Leak, all of which has
now been resolved except as described below.
Civil Litigation
In
resolve approximately 390 lawsuits including approximately 36,000 plaintiffs
(the "Individual Plaintiffs") pending against SoCalGas and Sempra related to the
Leak (the "Individual Plaintiff Litigation") for a payment of up to
billion
settlement to release all such plaintiff's claims against SoCalGas, Sempra and
their respective affiliates related to the Leak and the Individual Plaintiff
Litigation. As of
agreed to participate and submitted releases, and SoCalGas paid
under the agreement on
Sempra had either not received or not accepted as valid releases from
approximately 390 Individual Plaintiffs, approximately 80% of whom had not been
located or had failed to respond, according to plaintiffs' counsel. The
Individual Plaintiffs who do not participate in the settlement (the "Remaining
Individual Plaintiffs") will be able to continue to pursue their claims.
In
developers (the "Developer Plaintiffs") were filed against SoCalGas and Sempra
in connection with the Leak. In
settled the claims of four of the Developer Plaintiffs, and their claims were
dismissed. In
Developer Plaintiff and its claims were dismissed.
Separate from the Individual Plaintiff Litigation and Developer Plaintiffs
litigation, four shareholder derivative actions were filed alleging breach of
fiduciary duties against certain officers and certain directors of SoCalGas and
Sempra. Three of the four actions were joined in an Amended Consolidated
Shareholder Derivative Complaint, which was dismissed with prejudice in
2021
action, the plaintiffs filed an amended complaint in
Regulatory Proceedings
On
to resolve all aspects of the Leak OII. The Leak OII was opened to investigate
and consider, among other things, whether SoCalGas should be sanctioned for the
Leak and what damages, fines or other penalties, if any, should be imposed for
any violations, unreasonable or imprudent practices or failure to cooperate
sufficiently with SED, as well as to determine the amount of various costs
incurred by SoCalGas and other parties in connection with the Leak and the
ratemaking treatment or other disposition of such costs, which could result in
little or no recovery of such costs by SoCalGas.
The settlement agreement provides for financial penalties, certain costs that
SoCalGas will reimburse, a violation of California Public Utilities Code section
451, and costs previously incurred by SoCalGas for which it will not seek
recovery from ratepayers, among other provisions. The settlement agreement is
subject to approval by the CPUC.
Accounting and Other Impacts
As a result of entering into the settlement agreements with the fifth Developer
Plaintiff and with SED and CalPA to resolve all aspects of the Leak OII,
SoCalGas and Sempra expect to record a charge of approximately
Condensed Consolidated Statements of Operations.
An adverse outcome with respect to (i) any lawsuits by the Remaining Individual
Plaintiffs; (ii) the unresolved shareholder derivative actions, (iii) the Leak
OII if approval of the negotiated settlement is not subsequently obtained, or
(iv) the pending OII opened by the CPUC pursuant to Senate Bill 380 (the "SB 380
OII"), could have a material adverse effect on SoCalGas' and Sempra's results of
operations, financial condition, cash flows, and/or prospects.
This report is intended to provide material updates about certain proceedings
related to the Leak that have occurred since SoCalGas' and Sempra's most recent
public disclosures about such matters. This report does not purport to (i)
update the SB
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380 OII regulatory proceeding or the risks attendant thereto or to the Leak
generally or (ii) be a comprehensive description of material civil litigation,
any threatened civil litigation, regulatory proceedings or other matters related
to the Leak. For additional information about the Leak, including the matters
described herein, please refer to Note 11 of the Notes to Condensed
Consolidated Financial Statements in SoCalGas' and Sempra's most recent
quarterly report on Form 10-Q filed with the
Commission
Factors " in SoCalGas' and Sempra's most recent annual report on Form 10-K
filed with the
This report contains statements that constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on assumptions with respect to the future,
involve risks and uncertainties, and are not guarantees. Future results may
differ materially from those expressed or implied in any forward-looking
statements. These forward-looking statements represent our estimates and
assumptions only as of the date of this report. We assume no obligation to
update or revise any forward-looking statement as a result of new information,
future events or other factors.
In this report, forward-looking statements can be identified by words such as
"believes," "expects," "intends," "anticipates," "contemplates," "plans,"
"estimates," "projects," "forecasts," "should," "could," "would," "will,"
"confident," "may," "can," "potential," "possible," "proposed," "in process,"
"construct," "develop," "opportunity," "target," "outlook," "maintain,"
"continue," "progress," "advance," "goal," "aim," "commit," or similar
expressions, or when we discuss our guidance, priorities, strategy, goals,
vision, mission, opportunities, projections, intentions or expectations.
Factors, among others, that could cause actual results and events to differ
materially from those expressed or implied in any forward-looking statement
include risks and uncertainties relating to:
risks that we may be found liable for damages regardless of fault and that we
may not be able to recover all or a substantial portion of costs from insurance,
the wildfire fund established by California Assembly Bill 1054, in rates from
customers or a combination thereof; decisions, investigations, regulations,
issuances or revocations of permits and other authorizations, renewals of
franchises, and other actions by (i) the
(CPUC), Comisión Reguladora de Energía,
Energy Regulatory Commission
regulatory and governmental bodies and (ii) the
counties, cities and other jurisdictions therein and in other countries in which
we do business; the success of business development efforts, construction
projects and acquisitions and divestitures, including risks in (i) being able to
make a final investment decision, (ii) completing construction projects or other
transactions on schedule and budget, (iii) realizing anticipated benefits from
any of these efforts if completed, and (iv) obtaining the consent or approval of
partners or other third parties, including governmental and regulatory bodies;
civil and criminal litigation, regulatory inquiries, investigations,
arbitrations, property disputes and other proceedings, including those related
to the natural gas leak at
Canyon
certain of
energy contract rates, the electricity industry generally and the import,
export, transport and storage of hydrocarbons; cybersecurity threats, including
by state and state-sponsored actors, to the energy grid, storage and pipeline
infrastructure, information and systems used to operate our businesses, and
confidentiality of our proprietary information and personal information of our
customers and employees, including ransomware attacks on our systems and the
systems of third-parties with which we conduct business, all of which have
become more pronounced due to recent geopolitical events and other
uncertainties, such as the war in
state-owned entities and our counterparties to honor their contracts and
commitments; actions by credit rating agencies to downgrade our credit ratings
or to place those ratings on negative outlook and our ability to borrow on
favorable terms and meet our debt service obligations; the impact of energy and
climate policies, laws, rules and disclosures, as well as related goals and
actions of companies in our industry, including actions to reduce or eliminate
reliance on natural gas generally and any deterioration of or increased
uncertainty in the political or regulatory environment for
gas distribution companies and the risk of nonrecovery for stranded assets; the
pace of the development and adoption of new technologies in the energy sector,
including those designed to support governmental and private party energy and
climate goals, and our ability to timely and economically incorporate them into
our businesses; weather, natural disasters, pandemics, accidents, equipment
failures, explosions, acts of terrorism, information system outages or other
events that disrupt our operations, damage our facilities and systems, cause the
release of harmful materials, cause fires or subject us to liability for
damages, fines and penalties, some of which may be disputed or not covered by
insurers, may not be recoverable through regulatory mechanisms or may impact our
ability to obtain satisfactory levels of affordable insurance; inflationary and
interest rate pressures, volatility in foreign currency exchange rates and
commodity prices, our ability to effectively hedge these risks, and their
impact, as applicable, on
SoCalGas' cost of capital and the affordability of customer rates; the
availability of electric power, natural gas and natural gas storage capacity,
including disruptions caused by failures in the transmission grid or limitations
on the withdrawal of natural gas from storage facilities; the impact of the
COVID-19 pandemic on capital projects, regulatory approvals and the execution of
our operations; the impact at SDG&E on competitive customer rates and
reliability due to growth in distributed and local power generation, including
from departing retail load resulting from customers transferring to Community
Choice Aggregation and Direct Access, and the risk of nonrecovery for stranded
assets and contractual obligations;
(Oncor) ability to eliminate or reduce its quarterly dividends due to regulatory
and governance requirements and commitments, including by actions of Oncor's
independent directors or a minority member director; changes in tax and trade
policies, laws and regulations, including tariffs, revisions to international
trade agreements and sanctions, such as those that have been
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imposed and that may be imposed in the future in connection with the war in
ability to do business with certain counterparties, or impair our ability to
resolve trade disputes; and other uncertainties, some of which are difficult to
predict and beyond our control.
These risks and uncertainties are further discussed in the reports that Sempra
has filed with the
are available through the EDGAR system free-of-charge on the
sec.gov, and on Sempra's website, sempra.com. Investors should not rely unduly
on any forward-looking statements.
Oncor and Infraestructura Energética Nova,
same companies as the
Infrastructure
IEnova are not regulated by the CPUC.
None of the website references in this report are active hyperlinks, and the
information contained on, or that can be accessed through, any such website is
not, and shall not be deemed to be, part of this document.
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SEMPRA ENERGY FILES (8-K) Disclosing Other Events
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